The interwar years were a time of international subterfuge; of clandestine struggles between intelligence agencies only recently created. As Britain and Bolshevik Russia faced off in a global war of subversion and counter-subversion, a fear of communism swept the Whitehall establishment. A smear plot allegedly sought to topple a Labour prime minister, while another prime minister publicly misused intelligence for political expediency. Remarkably, these things happened twice in the space of a decade. The history of secret intelligence and Downing Street has an intriguing habit of repeating itself, and many of the issues that emerged in the interwar years would resurface to confront later prime ministers.

Two prime ministers dominated the 1920s and 1930s: Stanley Baldwin and Ramsay MacDonald. Both entered office as inexperienced and unsophisticated consumers of intelligence. Both faced a steep learning curve. Stanley Baldwin was a hands-off prime minister. A master of delegation, he allowed his ministers maximum freedom – to the extent that he drew charges of complacency and laziness. Baldwin expended most of his energies developing personal relations with MPs, and so spent a great deal of time sitting in Parliament: sometimes on the green benches of the Commons resting his eyes through some dreary debate, at other times slouched in an armchair somewhere soaking up the political atmosphere; but always in conversation. It was a working style that did not please everybody. One exasperated colleague complained, ‘What can you do with a leader who sits in the smoking room reading Strand magazine?’3

Beneath the surface, Baldwin was a highly-strung individual. He exhibited a range of nervous habits, from a subtle eye-twitch to compulsively smelling any object that fell into his hands. He was particularly keen on putting books to his nostrils and enjoying a long, loud sniff.4 Yet he worked well in a crisis. These are intriguing, almost contradictory, characteristics which bear directly upon a prime minister’s use of intelligence. His proclivity for delegation hints at a lack of interest in detailed intelligence material, while his nervous demeanour suggests an unsuitable constitution for dealing with the periodic crises of the secret world. In fact, Baldwin did draw steadily on intelligence throughout his time in office, although he did so in a blundering and unsophisticated manner which frustrated the intelligence community. He compromised GC&CS’s best intelligence source on the Soviets, publicly accused Air Ministry intelligence reports of misleading him, almost cost an MI6 analyst his job, and fell out with MI5 over surveillance of King Edward VIII.

In theory at least, Baldwin should have had an easier ride than Ramsay MacDonald. The illegitimate son of a farm labourer and a housemaid, MacDonald was an outsider. As the first ever Labour prime minister, he was also the first prime minister to hail from a working-class background. He was not part of the establishment; not one of the old boys. MacDonald had never even held a ministerial position before entering Downing Street. There can have been very few prime ministers as inexperienced in the workings of the secret world – or indeed of Whitehall in general – as he.

Despite his energy, good looks and personal magnetism, MacDonald was prickly, guarded and introverted. Unlike Baldwin, he had an impressive capacity for hard work. His working day began at seven, and would drag on until the early hours of the following morning. Poor at delegating, he served as his own foreign secretary in his first government throughout 1924. Returning as prime minister for a second time in 1929, MacDonald only appointed someone else, Arthur Henderson, as foreign secretary for political reasons, and sought to keep as much control over foreign policy himself as possible.5 One might expect that this would have increased his access to intelligence, and made him a particularly active consumer compared to other prime ministers. But in reality, he generally kept the intelligence community at a distance, and had little intention of ever meeting an MI5 or MI6 officer. At one point, in order to remain detached from the intrigues of the secret world, he even forced a senior MI6 man to stand in an adjoining room, and would only speak to him using the permanent secretary at the Foreign Office as an intermediary.6

Yet MacDonald was a Labour hero, the party’s man of destiny. He served as prime minister in 1924, and again between 1929 and 1931. In politics, as in much of British public life, however, heroes exist only to fall. Things inevitably soured for MacDonald in 1931 when he agreed to serve as head of a national coalition government designed to see Britain through the international economic crisis. Deemed a traitor by his erstwhile supporters, he was unceremoniously sacked from the Labour Party which he had done so much to turn into a credible force in British politics. Although he remained prime minister until 1935, the Conservatives, including Stanley Baldwin and Neville Chamberlain, increasingly dominated the government. Ravaged by insomnia and ill-health, the ageing prime minister ‘slowly faded away’.7 A sea voyage was recommended to restore his health, but he died on board an ocean liner in November 1937. By then, many of the European crises that would trouble his successors were already visible.

The election of the first ever Labour government raised a whole host of questions about the relationship between Number 10 and the intelligence establishment. King George V wondered what his ‘dear Grandmama’, Queen Victoria, would have made of a Labour government, and the same can be said for the intelligence services. MacDonald had long been on MI5’s radar: the service had actually recommended prosecuting him for delivering seditious speeches during the First World War. Elements within the intelligence elite continued to view MacDonald and his first government with ‘suspicion, alarm and in some cases contempt’. The mistrust was mutual, and Vernon Kell, the long-serving director-general of MI5, knew full well of Labour suspicions towards his service.8

The Foreign Office deliberately waited several months before showing any signals intelligence to the new prime minister. When he was finally inducted, MacDonald was probably the only member of his cabinet informed of the activities of GC&CS. The diplomats feared that Labour ministers would be horrified at the idea of intercepts and espionage, and, in Churchill’s words, kept MacDonald ‘in ignorance’. Even once he had gained experience, intelligence officers still kept him ill-informed. In the early 1930s, important reforms meant that MI6 confined itself to operations on foreign territory, while MI5 took over responsibility for countering communist subversion from Scotland Yard. Seeking to ease coordination and reduce overlap, these reforms shaped both organisations for decades to come. Yet it seems that MacDonald was not even told about them.9 Similarly, Arthur Ponsonby, his parliamentary under-secretary at the Foreign Office, was refused all access to signals intelligence and MI6 reports, despite directing the government’s Russia policy. Whenever Ponsonby mentioned intelligence, his officials became rigid. Not that Ponsonby particularly minded; he thought intelligence was a ‘dirty’ business.10

Few Labour ministers were intelligence enthusiasts. In 1929 Robert Vansittart, the senior official at the Foreign Office, had to defend the Secret Service Vote, from whence came funding for clandestine activity, against the new foreign secretary, Henderson. Britain’s most senior diplomat, Vansittart was an extraordinary polymath and aesthete – during his time as a young diplomatic trainee in Paris he had written a play in French, entitled Les Parias, which was a great success at the Théâtre Molière. He went on to produce several volumes of poems fêted by figures such as T.E. Lawrence. A romantic soul, full of passionate loves and hatreds, he adored intelligence.11 ‘Van’, as he was known, bemoaned how Henderson, a tee-totaller, ‘rated Secret Service like hard liquor, because he knew, and wanted to know, nothing of it’. Although this is perhaps unfair, given that even senior Labour ministers were given limited access to it, Vansittart felt frustrated because the government indulged in intelligence ‘all too little’.12 MacDonald’s administration took ‘a jaundiced view’ of the orientation of the intelligence establishment as a whole. There was a ‘climate of mutual mistrust’, with MI6 officials wary of discussing anything within earshot of MacDonald’s ministers.13

As prime minister, MacDonald did receive a weekly summary of British revolutionary movements written by Special Branch. He was not impressed, thinking the reports suffered from political bias and added little insight. To the anger of Special Branch, he refused to circulate them to cabinet. His attitude towards intelligence did soften over time, especially when dealing with growing problems of industrial unrest, and he came to realise that domestic intelligence provided by MI5, Special Branch and even MI6 could help to determine government responses.14 His hard work won respect amongst the Whitehall establishment. The cabinet secretary Maurice Hankey, for example, liked MacDonald ‘very much’, and got on with him ‘like a house on fire’.15 MacDonald was no Soviet stooge, and indeed was disliked by the Soviet ambassador in London, who called him fickle and vain. Throughout his premiership, MacDonald remained committed to monitoring Soviet activities just as much as did his Conservative counterparts.16 But the notorious ‘Zinoviev letter’ delivered a fatal blow to MacDonald’s burgeoning relationship with the secret world, and cast a dark shadow over relations between Labour ministers and secret service for decades to come.17

MacDonald found himself in a precarious position in 1924, perched delicately atop an unstable minority government. The fact that his was the first ever Labour administration made his position even more perilous. He, and his young party, had a lot to lose. Rather like Harold Wilson half a century later, MacDonald had been elected early in the year, but faced another general election in October. MacDonald too found enemies among right-wing sections of the establishment, eager to smear the prime minister and destabilise his nascent Labour government.

Days before the election of October 1924, the Daily Mail published a sensational story: ‘Civil War Plot by Socialists: Moscow Order to our Reds’.18 The newspaper had somehow obtained a copy of a letter purportedly written by Grigory Zinoviev, head of the Comintern, to the Communist Party of Great Britain. So close to an election, this ‘revelation’ inevitably had damaging implications for MacDonald and his Labour government – which was exactly why the Daily Mail published it so gleefully. Addressed ‘Dear Comrades’, the letter sought to ‘stir up the masses of the British proletariat’ and instigate rebellion. It mentioned ‘agitation-propaganda work’ inside the armed forces, and urged communists to penetrate ‘all the units of the troops’. Perhaps most damaging to MacDonald, it referred to a group inside the Labour Party ‘sympathising’ with closer Anglo–Russian relations.19 This implied that the government was soft on Bolshevism – an injurious charge, given the enduring paranoia about Moscow.

Although MacDonald had sought to distance Labour from the British communists, as prime minister he had already offered de jure recognition of the Soviet Union and signed two treaties with the new state. Like Lloyd George before him, he hoped simply to improve bilateral trade and bring the Soviet Union into the international community. Unfortunately, his approach ‘seemed nothing less than treachery’ to establishment figures fearful of the relentless march of communism. The popular press were critical too, dubbing one of the treaties ‘Money for Murderers’. To make matters worse, the Labour cabinet had also resisted prosecuting John Campbell, a communist journalist accused of subverting the armed services, on the grounds that he had an excellent war record.20 Personally, MacDonald had some reservations about that decision, and rightly worried that ‘more will be heard of this matter’.21

Questions over the role of the intelligence community in the notorious Zinoviev affair lingered for almost a century. Did intelligence officers deliberately forge the letter to bring down a democratically elected prime minister? If not, did they at least publicise the letter in order to achieve that end? Was the secret civil service during the 1920s simply anti-Labour? MI6’s official historian, Keith Jeffery, sums up the suspicions nicely: ‘Right-wing elements, with the connivance of allies in the security and intelligence services, deliberately used the letter – and perhaps even manufactured it – to ensure a Labour defeat.’22 These questions are crucial. They raise issues of accountability and political legitimacy at the heart of the secret world.

The Zinoviev letter was almost certainly a fake. Gill Bennett, the Foreign Office historian with access to MI6 sources, concludes that it was ‘highly unlikely’ to have been written by Zinoviev. Instead it was most likely a forgery produced by someone with links to the international intelligence community and a decent knowledge of Comintern. Bennett adds that the mystery forger was also probably ‘aware that there were interest groups in Britain who would make use of the forgery to further their own cause by damaging the Labour Government and derailing the ratification of the Anglo–Soviet treaties’. It is more than possible that information about the proposed forgery could have reached British intelligence officers looking to aid the Conservatives in the forthcoming election.23

White Russians, the exiled supporters of the tsar, were the most likely culprits. Those based in Britain certainly possessed motive, given their vehement opposition to MacDonald’s Anglo–Soviet treaties. They also had the means, including a sophisticated intelligence network and forgery capabilities in Europe. It is likely that the forger was based in Riga – some of the individuals passing intelligence to MI6 in that city were certainly involved with White Russian circles.24 One of a team of four key White Russian suspects in the forgery, Alexis Bellegarde, had close links with MI6, and went on to become one of the service’s most successful wartime double agents working against the Nazis.25 Others would exaggerate the authenticity of the letter as it was passed upwards – eventually to MacDonald himself.26

On 2 October 1924, MI6’s Riga station obtained the letter and despatched an English version to London. A week later, MI6 headquarters sent copies to the Foreign Office with a covering note asserting that ‘the authenticity of the document is undoubted’. It was, they insisted, by Zinoviev. In fact, MI6 conducted no checks on the authenticity of the letter. Nobody inside MI6, for example, had asked how Riga had obtained it; nor did anybody enquire as to whether it was the original or a translation.27

The Foreign Office rightly sought ‘corroborative proofs’ before showing the letter to the prime minister. MI6’s Desmond Morton supposedly provided these on 11 October. His report, apparently based on information received from an agent who had infiltrated the Communist Party of Great Britain, stated that the British communists had held a meeting at the start of October to consider a letter received from Zinoviev, thereby validating the Riga letter. Intriguingly, however, the agent’s original written report made no mention of any letter from Moscow at all. Morton claimed that the extra information had been gained after he met the agent on 10 October for further discussion. Morton appears guilty of, at the very least, asking leading questions to generate information to fit the Zinoviev story. At most, he knew the letter was a forgery, but realising the implications for MacDonald, intended it to be treated as genuine. He certainly disliked both the Bolsheviks and the Labour Party.28

Morton’s rather weak ‘confirmation’ was good enough for the Foreign Office. The permanent secretary observed: ‘We have now heard definitely on absolutely reliable authority that the Russian letter was discussed at a recent meeting of the central committee of the Communist Party of Great Britain.’29 The prime minister was duly informed. Upon first reading the letter on 16 October, MacDonald was suspicious. He ‘did not treat it as a proved document’, and asked that ‘care should be taken to ascertain if it was genuine’. ‘In the storm of an election’, it never crossed his mind that this letter ‘had any part to play in the fight’.30 He requested more proof, but his instructions were ignored, and none was sought.31 MacDonald was both right and wrong: the letter was of dubious authenticity, but it would play a role in the election.

MI6 realised the letter was a fake: Morton privately told MI5 towards the end of November – long after the damage was done – that ‘We are firmly convinced this actual thing is a forgery.’32 But he refused to admit this in wider circles. Quex Sinclair, the head of MI6, even wrote a list of reasons, probably drafted by Morton, explaining why the letter was genuine. Each, however, was rather weak. First, Sinclair argued that the source’s reliability strengthened the authenticity, even though MI6 did not know the identity of the ultimate source – an agent’s agent. Second, Sinclair pointed to various ‘corroborative proofs’, but these too were unreliable. Third, MI6 noted that the Soviets had frantically arrested two Comintern officials – a circumstantial point at best. Fourth, Sinclair arrogantly avowed that the possibility of MI6 being taken in by White Russian forgers could be ‘entirely excluded’. This was complacent, to say the least. He then falsely asserted that MI6 knew the identity of all hands through which the letter had passed. Again, this was simply not true, since MI6 did not know the original source. Finally, Sinclair argued that the letter’s contents were consistent with other genuine documents – but this proved nothing. Morton had something to hide. He had long prided himself on being able to spot forgeries, and most likely knew all along that the letter was a forgery.33

A leak was probably inevitable, especially once MI5 had circulated the letter widely to senior military personnel. There were also anti-MacDonald factions within MI6, with contacts in the press, who would have been glad to see him fall and who rubbed their hands with glee when the letter arrived in London. Given the overlapping nature of intelligence circles at the time, it is difficult to prove the identity of the culprit.34 There were many suspects, all rather devious. Within MI6, suspicion falls on Desmond Morton and Stewart Menzies, a future chief. In fact, Morton later accused Menzies of posting the letter to the Daily Mail. Joseph Ball of MI5 is another candidate. He later went on to work for the Conservatives and, liaising with his former intelligence colleagues, ran a campaign of dirty tricks against the Labour Party, including infiltration, press manipulation and the tapping of phone lines.35 Others include Reginald ‘Blinker’ Hall, the naval intelligence chief turned politician, who had lost his Conservative seat in Parliament when MacDonald came to power.36

All of these suspects have three things in common: they had served with the intelligence services; they were allied closely with the Conservatives; and they would have firmly believed that they were acting in the national interest by unofficially publicising the letter in an attempt to destabilise MacDonald. Remarkably, by 22 October Conservative Central Office also had a copy of the letter. Whoever leaked it, it certainly found its way ‘to those vested interests who could best make political capital out of it at the government’s expense’.37 Meanwhile, similar people, including ‘Blinker’ Hall, were exploiting the Conservative–intelligence nexus to play similar tricks against the nascent Irish Free State. Stanley Baldwin too was not above suspicion, regarding Ireland at least, given that he became an honorary member of a secretive group of former intelligence officers presided over by Vernon Kell and known as the IB Club. The Zinoviev affair can easily be seen as part of a broader campaign by the establishment to undermine opponents.38

Ramsay MacDonald was away in the final stages of electoral campaigning when the Daily Mail broke the story. Hoarse and audibly tiring, the last thing he wanted so close to a second election was a scandal which threatened to prematurely end the Labour dream. Although sceptical of the letter’s authenticity, he asked the Foreign Office to draft a protest to the Soviet ambassador. It had to be ‘so well-founded and important that it carried conviction and guilt’.39 Unsatisfied by the draft of this response, he substantially rewrote it in a hotel room at Aberavon on 23 October, but ran out of time before having to rush off to another election meeting. He therefore returned the unfinished draft to London without initialling it, indicating that he wanted to see it again before it was sent. Upon hearing that the Daily Mail had a copy of the Zinoviev letter and was about to publish, the Foreign Office sent MacDonald’s unfinished protest off to be printed alongside it. MacDonald was not consulted.40 He was therefore naturally ‘dumbfounded to be asked by a pressman attending one of my meetings that evening if I had authorised publication’. Caught off guard, he ‘felt like a man sewn in a sack and thrown into the sea’.41

MacDonald considered the matter carefully, and concluded that ‘in my absence, the anti-Russian mentality of Sir Eyre Crowe, the senior official at the Foreign Office was uncontrolled. He was apparently hot. He had no intention of being disloyal, indeed quite the opposite, but his own mind destroyed his discretion and blinded him to the obvious care he should have exercised.’42 Although undoubtedly disappointed with Crowe, MacDonald saved the blame for the Daily Mail and the Conservative Party. He ranted in his diary that ‘nothing untoward would have happened had not the Daily Mail and other agencies including Conservative leaders had the letter and were preparing a political bomb from it’.43 Rather naïvely, perhaps, he was ‘genuinely dumbfounded’ that the paper had obtained a copy.44

On 27 October, MacDonald finally gave a public explanation during an election speech in Cardiff. Feeling bruised and suspicious, he vehemently denied that he had delayed the publication of the Zinoviev letter, slammed the ‘Tory propagandists’ who ‘know nothing’, but loyally defended the Foreign Office and Crowe’s decision to publish his protest. He then attacked the press for obtaining a copy of the letter and seeking to ‘spring it upon us’. He implicated the Conservatives for smearing him and, to laughter from the crowd, alluded to ‘another Guy Fawkes – a new Gunpowder plot’.45 The speech failed to deal with the threat posed by the letter. With the election just hours away, the press continued to hound the beleaguered prime minister. The Daily Express and the Daily Mail both saw him at odds with the civil service. The Manchester Guardian joined the chorus, arguing that if the letter was a hoax MacDonald’s department had made an ‘egregious blunder’, but if it was genuine the prime minister could hardly accuse his enemies of fabricating a plot. MacDonald was livid at the ‘scoundrels of the press’, and increasingly saw the whole affair as a personal vendetta.46

The election was held on Wednesday, 29 October. Although MacDonald held his constituency, the Conservatives enjoyed a resounding victory, gaining 155 seats. Electoral experts suggest that the Zinoviev letter was not the cause of the Labour defeat, as the Conservatives, in all likelihood, were going to win regardless. But the following day MacDonald returned to London convinced that the letter was a forgery and a plot was afoot. He now sought proof.47 One of the first things he did was to visit Eyre Crowe. Instead of finding him at the Foreign Office, Crowe was ill in bed, heartbroken at having published the protest letter without approval. On 31 October MacDonald met with his outgoing cabinet. A long and heated discussion developed, with some calling for an inquiry into the role of the intelligence services in the Zinoviev affair. MacDonald resisted the idea, explaining that Crowe and the Foreign Office had not tried to sabotage the Labour Party. Instead, MacDonald appointed a cabinet committee to examine the authenticity of the now notorious letter. But with little firm evidence, no conclusion was possible. And with that MacDonald resigned and departed for a walking holiday in the West Country.48

Stanley Baldwin had been disturbed by the Zinoviev saga. Taking the helm on 4 November 1924, he convened the prime minister’s Secret Service Committee and ordered a review of the whole system, asking for recommendations for ‘greater efficiency’. At the end of 1925, the committee reported to Baldwin that had they been designing the intelligence system from scratch, a single unified department would have been desirable. As it was, however, they advised the prime minister to leave it as it was: imperfect but functioning.49 Baldwin cannot have been entirely satisfied. Two years later, he convened the committee again, this time tasking them with an investigation into the state of affairs at Scotland Yard – he feared that Labour might seize on the ‘political work’ of the Yard to argue that a government department was engaging in party politics.50 His anxieties about the intersection of ideology and intelligence, fuelled by Zinoviev, were prescient, given that he soon ordered a politically controversial security raid on Soviet premises which backfired spectacularly.

The 1926 General Strike increased the obsession of the authorities with Soviet subversion and the hidden hand of Moscow. Baldwin remained calm, but the Beaverbrook and Rothermere press portrayed the strike as an attempted revolution. MI5 and Special Branch intercepted the mail of leftist leaders and sampled public opinion directly by eavesdropping under railway platforms. The resolution of the General Strike in May 1926 was perhaps Baldwin’s most triumphant moment: he was mobbed in the streets and cheered in Parliament. But the security services and the military remained nervous, especially about sedition in the armed forces. In October 1926, at the behest of the excitable home secretary William Joynson-Hicks, a dozen prominent communists were arrested on transparently trumped-up charges.51

Britain’s intelligence services now had their collective eyes firmly fixed on the same building in Moorgate. It housed ‘Arcos’, or the All-Russian Co-operative Society, a body which orchestrated Anglo–Soviet trade. The intelligence community rightly perceived Arcos as a front for Soviet propaganda and subversion against Britain. MI5 ridiculed the Soviet description of Arcos – ‘the sole purchasing and selling agency in Great Britain for the Government of the U.S.S.R.’ – as naïve and childlike: ‘They believe that if they say a thing often enough most people are bound to believe it in the long run.’52 To complicate matters, Arcos shared offices with the Soviet Trade Mission, making the line between the two organisations rather blurred. Nonetheless, MI5 had traced the first major Soviet espionage ring to be deployed in Britain back to the offices of Arcos.53 MI5, MI6 and Special Branch all watched and waited, trying to build up a bigger picture of an international communist network.

In March 1927 a new lead emerged. A human source informed MI6 that a classified British military document had been copied at Arcos. Quex Sinclair promptly passed this information to Vernon Kell, given that, in Sinclair’s words, ‘it concerned an act of espionage against the Armed Forces’, and therefore was not MI6’s responsibility. With Zinoviev a fresh memory, Kell and MI5 prudently spent a few weeks validating the evidence before alerting the director of public prosecutions. It was then felt to be time for action. Kell attempted to see John Anderson, permanent secretary at the Home Office – but Anderson was at a conference and unavailable. Undeterred, Kell instead sought a meeting with the director of Military Operations and Intelligence. Also unavailable, out of London. To complete an unhappy hat-trick, Kell was also knocked back by the Chief of the Imperial General Staff; also away for a couple of days. After mulling over the problem during lunch, lamenting his lack of traction in Whitehall, Kell was ambling back towards the office when he bumped into the secretary of state for war, Laming Worthington-Evans, in the street, and managed to secure an appointment at the House of Commons for 5 p.m. Worthington-Evans kept Kell waiting for fifteen minutes, but having heard the evidence he sent Kell to see the home secretary. At 5.40 p.m., and after a frustrating day, Kell finally found a receptive audience in the fervently anti-communist home secretary. Joynson-Hicks, or ‘Jix’ as he was popularly known, immediately interpreted the evidence as proof of dangerous sedition. Leaving the MI5 boss in his office, he took Kell’s statement straight to the prime minister. Baldwin, who was with his foreign secretary Austen Chamberlain at the time, agreed that Arcos should be raided in order to obtain evidence of a breach of the Official Secrets Act. An animated Jix returned less than thirty minutes later, saying, ‘Raid Arcos. Do you want it in writing?’54

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